Abstract
The retail workforce is a strategic lever of the retailer for improving sales growth, market share, and profitability. With optimal retail workforce sizing and structure, customers would get prompt sales assistance and service, shelves should be replenished in a timely manner, store employees should be neither idle nor overstretched, and compensation costs should be managed effectively. Undersizing may hurt retailers in the long run as it affects merchandising capability and customer services, which ultimately hurt store sales and profits. Retail workforce optimization keeps store employees happy, improves customer service, and reduces opportunity costs of lost sales. The research provides various frameworks that outline the impact of undersizing in retail stores on sales and profitability and provides a methodology to determine the optimal workforce size. The research also provides an illustration with various scenarios to investigate whether a retail store is understaffed and calculates the financial impact of undersizing on revenue and profitability.
Highlights
No matter how you slice it in the retail business, payroll is one of the most important parts of overhead, and overhead is one of the most crucial things you have to fight to maintain your profit margins
The retail workforce is a sales generator as well as a cost generator, influencing the compensation cost of the workforce and the opportunity cost of lost sales associated with the retail store
Retail workforce staffing decisions are important for a retailer as consequences of such decision errors are likely to affect the retailer not just in the current year but for many years to come
Summary
No matter how you slice it in the retail business, payroll is one of the most important parts of overhead, and overhead is one of the most crucial things you have to fight to maintain your profit margins. Retailers must enhance the customer in-store experience to better compete with online retail. Retailers need to balance the need to increase sales by deploying more workforces for providing better services to customers against the need to control retail workforce expenses that can increase commensurately. Research works in this direction and discusses the contribution of the retail workforce in enhancing service delivery and profitability of retailers. It explores the traditional retail workforce sizing approach and highlights its limitations in determining optimal retail workforce size. The research underscores a crucial role of retail store employees in enhancing customer satisfaction and store experience and develops various frameworks for synthesizing value creation processes for retailers
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